Thursday, November 27, 2008

Now a new study, obtained by The Globe and Mail, concludes the softwood lumber agreement has undermined the Canadian industry it was supposed to help.

Since the deal was signed in October of 2006, struggling B.C. forest companies have paid more than half a billion dollars in export taxes under the deal.

"The added taxes came at the worst possible time. With lumber prices plummeting due to a rapidly deteriorating U.S. housing market, B.C. forest companies were awash in red ink," wrote forestry analyst Ben Parfitt for the Canadian Centre of Policy Alternatives. "The result was numerous mill closures in B.C."

The amount paid in export taxes to date is still outweighed by the roughly $2.5-billion that B.C. forest companies received in cash when the deal was settled.

And what’s more, the “deal” makes it impossible for the sort of government aid that will eventually be extended to the auto sector to be offered to BC’s beleaguered forest industry without triggering another trade war.

5 comments:

John Allan, president of the Council of Forest Industries, said yesterday the softwood lumber deal means Canadian forestry companies cannot get direct assistance from government.

"The debate that is going on between the politicians ... should be limited to assistance to workers getting out of the industry and getting on with their lives," he said in an interview. "Recovery is a couple of years away and the industry is going to continue to shrink."

But he said the agreement itself is not to blame: "In retrospect, it was a good thing," he maintained. "Anyone who points to the lumber agreement as part of our problems is dead wrong."

I do Eugene. And I listen to all the viewpoints expressed, consider them, and draw my own conclusion, rather than searching for one viewpoint that supports my pre-conceived worldview and clinging to it with my fingers in my ears while I chant "la la la" to drown out any other views.

The CFI has one viewpoint. And one agenda. And a lot of other people have other viewpoints too, whether the CFI considers them dead wrong or not.

The point Jeff, is that it's only politicians trying to score points (and you apparently) who are still trying to blame the softwood deal for the industry's current shape.

For years we propped up inefficient mills with subsidized stumpage rates and sold 90% of our output to the US. In the bad times we were guilty of dumping product at below cost. When they called us on it and forced us to pay a tax to compensate for the stumpage fee discrepancy, most in the industry wondered what took them so long. Obviously the industry still pressed politicians to fight it, it's money out of pocket after all. The politicians took the ball and ran with it not understanding what they were fighting for or the reasoning for the quotas/import tax. In the mean time, Russia and Scandinavian countries were building mills with technology that made ours look like they were run by a waterwheel. Couple those inefficiencies with the collapse in the US market and you have $200 mfbm lumber. That's why mills are closing. It has nothing to do with anything related to the softwood deal.